engleski

Enterprise Risk Management in the Electric Power Industry

This chapter analyses the use of enterprise (integrated) risk management in the electric power companies. The results presented are of a study conducted on a sample of 38 power companies, members of the EFET Association (European Federation of Energy Traders). The application of enterprise risk management, risk factors that have the greatest impact on the performance as well as methods used to measure risk exposure were explored. Research has shown that 84% of surveyed companies have implemented integrated risk management, so they are managing risks at the level of the entire company. In 65% of companies market risks have the greatest impact on the profitability of the electric power companies, with the highest probability of occurrence. The reason most likely lies in the fact that, after deregulation, the electric power companies are more exposed to changes in the wholesale electricity prices, which are very volatile, as well as to changes in fuel prices which are used in power plants to produce electricity. The results revealed that 63% of companies in the sample use the VaR measure in order to evaluate short-term exposure to market risks. Only 11% of selected companies recognize the importance of Cash Flow at Risk measure and use it to estimate the volatility of cash flows of the entire company. It can be concluded that CFaR, as the most appropriate measure of the long-term risk exposure in non-financial companies, is not sufficiently represented in electric-power companies. According to the results of the study, the actual application of the concept of integrated risk management in electric power companies could be improved.

risks in the electric power industry, integrated risk management, EFET association

nije evidentirano